A Solution to Poverty in America

[Rota]

5) My solution

So, the problem is that every moment the wealth gap grows, the poverty problem gets worse. How can we shrink the wealth gap without blatantly taking from the rich and giving to the poor? The solution is to give the poor more buying power. But we already do this. We give welfare and food stamps and housing assistance. There are tons of social programs that add buying poor to the poor in the form of benefits that the rich aren’t eligible for. Yet nothing is affecting the wealth gap.

Look at your budget. I can almost guarantee that the largest portion of your budget is housing. After that, food is a strong number two. There are exceptions to the rule, but I would bet that about 99% of households have budgets like that.

So, we can break down the budget into three things. Housing includes mortgage or rent payments and the utility bills. Food is the grocery budget. Lifestyle is everything else.


Here’s the crazy part, but hear me out…

Step 1) Place everyone in America on food stamps. (wait for laughter to die out)

This is why the solution doesn’t cost much more. It’s a simple expansion of a program that already exists. The infrastructure is all there, and we just got rid of all the red tape about who does and does not qualify. We merely have to print more stamps and stamp cards.
Most important affect: No citizen goes hungry.

Step 2) Make food purchasable ONLY with food stamps.
Now everyone in America has the same buying power for food. Each citizen’s personal buying power from wealth and income will only determine housing and lifestyle.

That’s the two big bullet points, but is by no means, the end of the plan.

Create a commodity exchange for food stamps
Allow the free exchange of dollars and stamps. One of the various markets will bid to be in charge of the trade, so the cost of upkeep is taken care of in the private sector. Chicago Mercantile, NYSE, American, or whoever can fight over the rights. Banks can use this exchange to keep a stock of stamps and sell excess stamps, just like the commercial paper market.

Basically, America becomes an economy of two currencies that are allowed to float against each other. There are stamps, which everyone gets and can only be spent on food. There are dollars that people earn to determine quality of life by purchasing those “lifestyle” goods and services.

With the large market allowing banks to exchange stamps, there will be a national price of stamps. Any person will be able to go to a bank and trade their excess stamps for the same value in dollars, or to buy some extra stamps if they have some extra food costs that month. At some point, this exchange service will most probably become available at the customer service in each grocery store.


Here’s the goal…

Let’s pretend the current market price is 1 stamp equals 1 dollar. Let’s say everyone gets 100stamps a month. A college student may decide to live on Hot Pockets and Ramen. That student spends 40 stamps on food and sells off the extra 60 to buy that chemistry textbook. A wealthy person wants to throw one of those parties that rich people love. In order to afford the hors d'oeuvres and champagne, she must go to the bank and buy 600 stamps. In essence, She has just bought 10 chemistry textbooks for the 10 students that chose to eat Ramen this month.

We have transferred lifestyle wealth and buying power from the rich to the poor. And we have done it without a tax. The rich person has every right to live within the 100 stamp food budget if they want. But, if she wants the higher quality of life that enjoys a fancy party, then that must come out of the lifestyle budget of dollars. The transfer of lifestyle wealth is purely optional. A free market has been created that will move wealth from the rich to the poor.

Here’s the catch line of the plan…
We will greatly reduce poverty and shrink the wealth gap because of the rich, not in spite of them.